QBI Deduction After OBBBA: What Small Business Owners Need to Know

Running a business isn’t easy, and taxes don’t make it any easier. But here’s some good news: one of the most helpful tax breaks for small business owners—the Qualified Business Income(QBI) deduction—just got a big upgrade under the new One Big Beautiful Bill Act (OBBBA).

In short: the deduction is now permanent, easier to qualify for, and designed to put more money back in the pockets of small business owners.

What Is the QBI Deduction?

The QBI deduction was first introduced in 2017 as part of the Tax Cuts and Jobs Act (TCJA). It was created to give small businesses a break, much like the tax cuts that large corporations received.

Here’s the simple version:

• If you run your business as a sole proprietorship, partnership, LLC, or S-corporation, you may be able to deduct up to 20% of your business profits on your personal tax return.
• Example: if your business earned $100,000 in profit, you might only pay taxes on $80,000.
• The challenge? The original rules included confusing income limits, phase-outs, and a looming 2025 expiration date.

What Changed Under OBBBA?

The OBBBA made the QBI deduction stronger, clearer, and more reliable. Here are the highlights:

1. Permanent Deduction
       No more 2025 expiration date—the QBI deduction is here to stay.
2. Higher Income Limits
       You can earn more before the deduction starts phasing out, and these thresholds will now adjust for inflation each year.
3. Minimum Deduction
       Even if your business earns just $1,000 in profit, you’ll get at least a $400 deduction.
4. Simplified Rules
       Service-based businesses like law, medicine, and consulting now have clearer eligibility. And if your income is below the updated thresholds,

                the calculation is much simpler.

Why Small Business Owners Should Care?

At the end of the day, the QBI deduction means you could owe less money in taxes—and keep more in your pocket. With the new updates, it’s more reliable, more people can use it, and it’s easier to figure out.

That’s why we always check if our clients qualify. Even a few thousand dollars in savings can go a long way toward hiring help, investing in new equipment, or just giving you peace of mind.

The Bottom Line

Since 2017, the QBI deduction has helped millions of small business owners reduce their tax bill. With the changes from OBBBA, it’s now permanent, easier to use, and more valuable than ever.

For small businesses, that means more certainty, more savings, and more room to focus on what really matters—growing your business and building your future.

Not sure if you qualify? That’s what we’re here for. We’ll walk you through the rules, do the math for you, and make sure you’re not missing out on money you could be saving.

📞 Reach out today to schedule a review and make sure you’re getting the full benefit of this powerful deduction.